As Cisco’s chief development officer, Charles Giancarlo oversees the company’s R&D direction and strategy. With the expansion into new markets and technologies — such as consumer electronics and video — the types of engineers Giancarlo manages at Cisco have diversified beyond router, switch, ASIC and network software developers. He spoke with Network World about juggling Cisco’s various R&D activities, as well as some enterprise security technologies to expect from Cisco this year.
As Cisco’s chief development officer, Charles Giancarlo oversees the company’s R&D direction and strategy. With the expansion into new markets and technologies — such as consumer electronics and video — the types of engineers Giancarlo manages at Cisco have diversified beyond router, switch, ASIC and network software developers. With the resignation this week of Mike Volpi, senior vice president of Cisco’s Service Provider and Routing Technology groups, industry observers are saying Giancarlo is the clear front-runner to succeed CEO John Chambers someday. Giancarlo spoke with Network World (before Volpi’s departure was announced) about how he juggles Cisco’s various R&D activities, as well as about some enterprise security technologies to expect from Cisco this year.
Cisco says 45% of its business comes from enterprise, 25% from service providers and commercial customers [respectively] and around 5% from consumer products. How are R&D spending and product development resources allocated to these businesses? Does it reflect in percentage of revenue coming in from these segments?
It’s quite different. The business model in each one of those segments is quite different. We tend to spend, relative to revenue, the most in service provider, followed by enterprise, followed by commercial and then consumer.
Even though service provider is not quite as large a business for us as enterprise, the nature of the service provider business is one that drives greater demand for R&D. Albeit we probably spend less on sales for service providers. So there’s a bit of a trade-off. [Service providers] are bigger customers and require fewer salespeople, but on the other hand they require larger amounts of R&D.
The complexity of the products and the nature of the competition [are the reasons for this]. With large service providers, they expect very custom environments. If you compare the traditional P&L of a service provider business versus traditional P&L of an enterprise business, the service provider vendor will spend more on R&D and less on sales than an enterprise business. Of course we’re a blend of all of those.
As Cisco pushes further into the consumer market, how is this affecting R&D strategies and operations?
We’re blending what we’ve learned from experts in the consumer business with what Cisco does well. I would say that in general, Cisco is a very strong research and development organization. It always has been, and I think we’re well respected in the industry for our capabilities there. Obviously the things that you need to focus on in the consumer world are quite different from other markets. That’s an area where we’re still learning. But it is one where we’re going to apply our resources. We’ll also leverage whatever technology we have in other market segments to the extent that it’s useful — in the consumer market.
What areas does Cisco need to learn more about, or improve in, to succeed in the consumer market?
Things that we need to learn are the importance of establishing brand, establishing market presence. Technology-wise, it’s things like ease of use, user interfaces, all of these things that tend to be less important in our other business segments are important things for us in the consumer market. We’re learning a lot about these things day by day. It’s the difference between [selling products] to expert technologists and to the common consumers. [Consumers] are not experts, but on the other hand, they want something that’s not only easy to use but fun to use. Certainly, we’re not there yet, but it’s something we aspire to.
Does this mean Cisco is hiring new types of engineers? Or is there shuffling around of R&D personnel among the business units?
We do have separate R&D staffs in Linksys and Scientific Atlanta. It’s about getting the right mind-set there. Getting them focused on the right qualities of both low-cost and a focus on the user.
Do you manage R&D staff working on TV remotes differently from technologists developing customer networking ASICs or carrier-class routers?
It’s always a challenge whenever you have to nurture more than one culture inside an organization. When I say culture, you have one group that will have one set of priorities, and another with another set. It creates a different cultural environment. Nurturing more than one in a company, and being able to be successful in more than one, is a tremendous challenge. On the flip side of that, we get tremendous leverage, where we can utilize technology we’ve developed in one area across the rest of our businesses. There’s great upside if we are able to manage the ability to support more than one team and more than one cultural environment inside the company.
What’s an example of a technology Cisco has used across multiple business segments?
Voice over IP, for example. We utilize it in enterprise, but we use it across the board — enterprise, service provider and consumer. But the trade-offs in each group are quite different. Ease-of-use versus functionality, versus scalability versus cost. This sets up some very interesting discussions, not only among the product development teams themselves but as they interact with service, sales and support. Sometimes we need to go in and actively translate and make sure we have the right focus in the right areas so we do produce the right thing for that particular customer segment.
What should enterprise customers expect to see from Cisco’s IronPort buyout? Will this play out similar to past security acquisitions, where the technology is first offered as a stand-alone product, then melded into routers and switches?
Customers should expect two things. One is what you just mentioned — the virtualization of the capability beyond just the stand-alone product, into the core of our router and switch product lines. But the second thing that we will do is use the IronPort platform — both the software and hardware — as a base for additional capabilities associated with information security. This will go well beyond just e-mail security, to full content management — the management of content going into a company and going outside of a company.
What IronPort offers seems very different from past security technologies Cisco has acquired?
It’s certainly something very different. Every other security technology we’ve acquired in the past has been related to what you might call communication security — packet-layer, access-layer security for an enterprise network.
[IronPort’s technology] is associated not so much with communications security but rather with information security — securing the information that corporations own, or information that is coming into or leaving a corporation. These two types of security can be linked. We can certainly leverage information that is embedded in the communications layer to provide additional information regarding how information received over that layer should be handled. They are complementary, but they are very different as well.
Regarding enterprise security, what is the status of Cisco’s NAC efforts? Is the company where you would like it to be in terms of NAC product offerings and customer adoption?
With regard to NAC, I would say the full implementation of NAC is a little bit behind where we would have liked to be at this time. Part of that is due to the fact that our customers indicated to us that they did not want to just deploy NAC at the branch office. They wanted it on the main campus. And for full deployment in the main campus, we really have to go through full switch upgrades on all of our switches across all those product lines. And that’s taken a little bit longer than we expected. But we’ll be rolling out full NAC deployments this calendar year, certainly.
The basic [NAC] capabilities will become available across our mainstream switching products this year, which will allow us to deploy in mainstream customers. We have to finish those products this year. [NAC support] is available now on some of the stackable switches, but not yet fully on the [chassis-based] Catalyst 4500, and only partially available on the Catalyst 6500. So we just need to complete all of that.
